GAO Urges ED to Help States on Stimulus Monitoring
| Date Posted: October 1, 2009 |
Washington, Sept. 29 — States need better training and technical assistance to tackle the job of monitoring school districts under the stimulus, according to the Government Accountability Office (GAO).
Recent audits show that many states already have trouble in the area of sub-recipient monitoring — a difficulty that could be exacerbated at a time when lean state budgets have caused staff shortages and education departments are grappling with new programs created by the American Recovery and Reinvestment Act (ARRA). The largest of these programs is a $40 billion state fiscal stabilization fund (SFSF).
The GAO report, released in September and titled "Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed," noted that New Jersey's 2008 single audit found "no evidence of state monitoring" of districts' use of Individuals with Disabilities Education Act (IDEA) funds. Similarly, an Arizona 2008 single audit found that the state "did not comply with subrecipient monitoring requirements for Title I and IDEA in numerous instances."
"Some states face challenges in developing monitoring plans for SFSF funds because of their existing problems in monitoring subrecipients of other education funds," the GAO said.
U.S. Department (ED) officials told the GAO that they plan to complete their plans for the monitoring of stabilization funds when they release final guidance on that subject later this fall.
In the meantime, ED is monitoring states' drawdowns of their ARRA funds. "Whenever a state requests a large drawdown of funds, Education officials told us they contact the state before approving the release of the funds to learn why it is drawing down the funds and whether it can document that it has an immediate need for the funds," according to the report. This practice drew the department's attention to a substantial drawdown of SFSF funds in Arizona that ED ultimately denied. According to the GAO, the state planned to use the funds to backfill a $250 million reduction in general fund appropriations for school districts in 2009.
"According to Education officials, Arizona's plans for the funds would have violated Recovery Act requirements because Arizona had not required LEAs [local education agencies] to submit applications for the funds and LEAs would not have been aware that the funds they had used in fiscal year 2009 were Recovery Act funds, and, therefore, LEAs would not have been able to properly account for the funds in accordance with Recovery Act requirements," the GAO said.
As the Title I Monitor reported in September, ED has also identified six states that are at-risk for stimulus spending problems. The GAO noted that California, Illinois, Michigan, Texas, the District of Columbia and Puerto Rico were chosen due to indicators "such as the number of monitoring or audit findings in the state and the level of turnover in education leadership within the state." ED has promised financial and technical assistance to those states, including potential site visits.
Already, the GAO has found some irregularities involving cash management of ARRA funds in California and Illinois.
Illinois apparently disbursed SFSF funds to school districts before they were ready to spend the funds — a fact that alerted auditors to cash management problems, the GAO found. Illinois is responding by instituting better tracking and reporting controls of cash balances.
In California, some districts have large unused balances after the state drew down 80 percent of its Title I aid and immediately sent the money to districts that were unready to spend it.
—Andrew Brownstein
Recent audits show that many states already have trouble in the area of sub-recipient monitoring — a difficulty that could be exacerbated at a time when lean state budgets have caused staff shortages and education departments are grappling with new programs created by the American Recovery and Reinvestment Act (ARRA). The largest of these programs is a $40 billion state fiscal stabilization fund (SFSF).
The GAO report, released in September and titled "Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed," noted that New Jersey's 2008 single audit found "no evidence of state monitoring" of districts' use of Individuals with Disabilities Education Act (IDEA) funds. Similarly, an Arizona 2008 single audit found that the state "did not comply with subrecipient monitoring requirements for Title I and IDEA in numerous instances."
"Some states face challenges in developing monitoring plans for SFSF funds because of their existing problems in monitoring subrecipients of other education funds," the GAO said.
U.S. Department (ED) officials told the GAO that they plan to complete their plans for the monitoring of stabilization funds when they release final guidance on that subject later this fall.
In the meantime, ED is monitoring states' drawdowns of their ARRA funds. "Whenever a state requests a large drawdown of funds, Education officials told us they contact the state before approving the release of the funds to learn why it is drawing down the funds and whether it can document that it has an immediate need for the funds," according to the report. This practice drew the department's attention to a substantial drawdown of SFSF funds in Arizona that ED ultimately denied. According to the GAO, the state planned to use the funds to backfill a $250 million reduction in general fund appropriations for school districts in 2009.
"According to Education officials, Arizona's plans for the funds would have violated Recovery Act requirements because Arizona had not required LEAs [local education agencies] to submit applications for the funds and LEAs would not have been aware that the funds they had used in fiscal year 2009 were Recovery Act funds, and, therefore, LEAs would not have been able to properly account for the funds in accordance with Recovery Act requirements," the GAO said.
As the Title I Monitor reported in September, ED has also identified six states that are at-risk for stimulus spending problems. The GAO noted that California, Illinois, Michigan, Texas, the District of Columbia and Puerto Rico were chosen due to indicators "such as the number of monitoring or audit findings in the state and the level of turnover in education leadership within the state." ED has promised financial and technical assistance to those states, including potential site visits.
Already, the GAO has found some irregularities involving cash management of ARRA funds in California and Illinois.
Illinois apparently disbursed SFSF funds to school districts before they were ready to spend the funds — a fact that alerted auditors to cash management problems, the GAO found. Illinois is responding by instituting better tracking and reporting controls of cash balances.
In California, some districts have large unused balances after the state drew down 80 percent of its Title I aid and immediately sent the money to districts that were unready to spend it.
—Andrew Brownstein
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